Case Study: The Cost of Working

Cost of Working2

As a society, we think of our jobs as something we must do to make money so we can buy stuff, pay our bills, and maybe even have a little left over for savings.  We think in terms of how much our employer pays us, whether it’s an annual salary or hourly wage.  We’re told working is a necessary part of life, but how much do we spend just to go to work in the first place?

When I tallied up our 2014 expenses for Getting Our Spending Under Control, I was a little shocked at how high they were.  After all, we’re naturally frugal and rarely buy any “stuff” beyond the necessities. 

While examining our expenses more closely, I noticed many were fairly typical items like food, housing, utilities, and insurance as well as several one-time costs related to our new house and wasn’t too concerned about those (although they can be reduced as well).  Others, however, were more concerning as I realized they were directly attributable to maintaining full time employment.

Being a numbers guy, I decided to approximate how much it cost our family to go to work in 2014.  This turned out not only to be an interesting exercise, but also helped build our case for ditching the daily grind.  I mixed in a few assumptions with our actual costs to get a fairly reasonable estimate.  Our costs attributed to working a traditional job are broken down below.


–          $16,744 (actual cost)

Fuel for cars

–          Combined 70 mile roundtrip per day x 245 days/yr = 17,150 miles/yr commute

–          Vehicles averaged 23 miles/gallon

–          17,150 miles/(23 miles/gallon) = 745.65 gallons of gas

–          Assume gas costs $2.50 – $3.00/gallon

–          745.65 x 2.5 = $1,864

–          745.65 x 3 = $2,237

–          Approx. = $2,000

Auto Registration and Insurance on second vehicle

–          Assume a second vehicle would not be needed if both Mrs. DTG and I were not working

–          $500

Auto Maintenance

–          Assume auto maintenance is cut in half due to not needing second vehicle and driving less

–          $1,078/2 = $539 (half of actual 2014 cost)

Larger house (specific to our current live-in nanny situation)

–          Assume we would have purchased a smaller, less expensive house without a sixth person living here resulting in a 15% decrease in housing costs

–          $12,918 (actual mortgage interest, property taxes, insurance) x 0.15 = $1,938

–          Assume 15% decrease in gas/electric

–          $2,358 (actual costs) x 0.15 = $354

–          Assume 5% decrease in water/trash/recycling due to less water usage

–          $1,067 (actual costs) x 0.05 = $53

Corporate Costumes (work clothes)

–          $500

Random “Mandatory” Office Lunches/Donations/Gifts

–          Assume $25/mo per person

–          $25 x 12 = $300


–          16,744 + 2,000 + 500 + 539 + 1,938 + 354 + 53 + 500 + 300 = $22,928/yr

Based on this analysis, we spent nearly $23,000 last year just for the privilege of showing up to work!  This doesn’t even include the $1,000 additional cost on a vacation rental in Colorado during the peak season (early retirees can take advantage of off-season rates; we went during Christmas week, the only time Mrs. DTG was able to take off from work/school) or $6,000 in car payments (car is now paid off, was financed for 3 years at 0.9%), which would’ve brought the total to $30,000!!!

Not sure about you, but I can find a lot of better uses for that money.  When thinking about how much your job pays, you also need to consider the hidden costs of working.  This simple example illustrates one way your expenses could drop drastically in early retirement.  How much are you paying to work?

16 thoughts on “Case Study: The Cost of Working

  1. surprisemillionaires says:

    I have found a way to cut the majority of these costs – working from home. I have saved thousands of dollars in gas money, wardrobe and lunches out just by logging in to work in the comfort of my own home. I know it is not an option for many. But if you get the chance, go for it! You won’t be sorry.

    Liked by 1 person

  2. Howto$tuffYourPig says:

    When I lost my job at the end of last year due to a company closure, the first thing I did was panic! Then after the dust settled I realized that I didn’t even need the job. We are saving more money now than when I was working! We have made a few minor lifestyle modifications, but we are on track to put more money in our investments this year than we were able to do in previous years. My husband still works, but we are still working through whether or not I should return to the work force. Great post!

    Liked by 1 person

  3. The DJ (@ says:

    Great way to look at your spending. We did a similar calculation recently as I have been debating whether to quit earlier than our initial FI date so I can spend more time with our son. However, the math said it was better for me to stay employed (shucks!). Working from home the majority of the time has decreased a lot of the costs associated with having a job and if staying in my current job for a little while longer means meeting our FI/RE goal, then I am willing to do it!

    Liked by 1 person

    • Ditching the Grind says:

      Sometimes you can’t argue with the numbers. I’d like to stop working now, but I know if I stick it out just a few more years it’ll add a nice chunk to our savings. I’m concentrating on building passive and part time income up to our spending level which I’ll be posting about soon. You guys are doing awesome, by the way!


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